EXW, FOB, CIF or DDP: which Incoterm to choose when importing from China?

When a Chinese supplier quotes "USD 4.20 FOB Shenzhen" or "USD 5.10 DDP", the price means little until you know what the Incoterm includes. The rule you choose decides who pays for each part of the journey, who handles customs on each side and where the risk of loss or damage passes from seller to buyer.

What Incoterms are, and what they are not

Incoterms are standard trade terms published by the International Chamber of Commerce (ICC). The current version is Incoterms 2020, which remains the reference in 2026. Always write the rule, the named place and the version in your contract, for example "FOB Ningbo, Incoterms 2020".

Incoterms cover delivery, costs, risk and customs formalities. They do not cover transfer of ownership, payment terms or the quality of the goods. Those belong in your purchase contract.

The six rules that matter most for China imports

EXW (Ex Works)

The seller makes the goods available at its factory or warehouse. You handle everything else: loading, export clearance in China, international freight, import clearance, duties and VAT. Risk passes to you as soon as the goods are placed at your disposal.

FCA (Free Carrier)

The seller clears the goods for export and hands them to the carrier you nominate, at its premises (loaded) or at another named place such as your forwarder's warehouse. FCA works for all transport modes, including air, rail and containers.

FOB (Free On Board)

The seller clears the goods for export and delivers them on board the vessel you nominate at the port of shipment. You pay the sea freight and everything after. Risk passes when the goods are on board.

CIF (Cost, Insurance and Freight)

The seller pays sea freight and minimum insurance to the destination port. The catch: risk still passes to you when the goods are loaded in China. If something goes wrong at sea, you claim on an insurance policy you did not choose.

DAP (Delivered at Place)

The seller delivers to a named place in your country, such as your warehouse, ready for unloading. You handle import clearance and pay duties and VAT. Risk passes at destination.

DDP (Delivered Duty Paid)

The seller delivers to your named place with import clearance done and duties and VAT paid. It is the most convenient option for the buyer, and also the one that needs the most care (see below).

Important: FOB and CIF (like FAS and CFR) are designed for sea and inland waterway transport only. For air, rail or express shipments, use FCA, CPT, CIP, DAP or DDP.

Who pays and handles what

Rule	Transport modes	China export clearance	Main freight	Cargo insurance	EU import clearance, duties, VAT	Risk passes to buyer
EXW	All	Buyer	Buyer	Buyer (optional)	Buyer	At the seller's premises, goods not loaded
FCA	All	Seller	Buyer	Buyer (optional)	Buyer	When handed to the buyer's carrier at the named place
FOB	Sea and inland waterway	Seller	Buyer	Buyer (optional)	Buyer	When goods are on board the vessel in China
CIF	Sea and inland waterway	Seller	Seller	Seller (minimum cover)	Buyer	When goods are on board the vessel in China
DAP	All	Seller	Seller	Seller (optional, for its own risk)	Buyer	At the named destination, before unloading
DDP	All	Seller	Seller	Seller (optional, for its own risk)	Seller	At the named destination, before unloading

The pitfalls of each option

EXW: the export clearance problem

EXW looks like the cheapest quote, but in China export declarations are made by a registered exporter. A foreign buyer cannot easily do it, so in practice someone else declares the goods: the supplier, your forwarder's agent or a third party. If the export is declared under the wrong name, value or code, you may lack the documents you need, and the supplier may add hidden fees for "export license" or loading. Under EXW, the seller is not even obliged to load the truck. If a supplier offers EXW, ask for FCA at the same location instead: the seller then handles export clearance and loading.

FOB: a sound default, with one nuance

FOB gives you control over the main cost and the main risk. You choose the forwarder, compare freight quotes and know exactly what you pay from the Chinese port onward. Suppliers are used to it, and it is the most common term for sea shipments from China.

The ICC notes that for containers, which are handed over at the terminal before loading, FCA is technically a better fit than FOB. In practice FOB remains widely used for container shipments from China. If you use it, agree with the supplier which local charges at the port of loading are included.

CIF: cheap freight, expensive arrival

With CIF, the seller chooses the carrier and forwarder. Some offer low freight and recover the margin through high destination charges billed to you on arrival: terminal handling, documentation and release fees. The insurance required is also the minimum cover (Institute Cargo Clauses C), which excludes many types of damage. Ask for the policy and check it.

DDP: convenient, but check who is the importer

Under DDP, someone must act as the importer in the EU, with an EORI number, and pay duties and import VAT. Cheap DDP offers from suppliers or freight forwarders sometimes stay cheap by under-declaring the value, using a wrong commodity code or grouping many buyers' goods under one declaration. The risks for you:

• goods held or seized by customs, and possible reassessment of duties and penalties;
• no import declaration in your name, so no customs record to support your accounts or answer a marketplace request, and no import VAT to deduct;
• anti-dumping duties ignored in the quote, then claimed later;
• unclear responsibility for product compliance under EU rules.

DDP can work well for small shipments or e-commerce stock, with a reputable provider. Ask who is the declared importer, which value and code are declared, and ask for a copy of the import declaration.

DAP: a useful middle ground

DAP lets the seller or its forwarder organise transport to your door while you keep control of customs through your own broker. You get a proper import declaration in your name and deduct VAT normally.

Which Incoterm should an SME choose?

• Sea freight, regular orders: FOB, or FCA, with your own forwarder. It is the best balance of cost control and transparency.
• Air, rail or goods collected from several suppliers: FCA at the supplier or at a consolidation warehouse.
• First small order, no forwarder yet: DAP, with customs handled by a broker you choose.
• DDP: only with a provider who shows you the declared value and the importer of record.
• EXW: avoid unless your forwarder has a reliable partner in China and the supplier provides full export documents.

Two more points. First, the EU calculates duties on a value that includes freight and insurance to the EU border, so under EXW, FCA or FOB your forwarder adds these costs to the invoice value. Second, whatever the rule, compare quotes on the same basis. Our step-by-step import guide puts the Incoterm in the context of the whole process.

If you buy from several factories or markets, goods can be consolidated first and shipped under a single term. Vitalic Trading can collect and check goods in China and ship them FOB, EXW or DDP through its forwarder partners, and explain what each quote includes.